CHC Announces Record Year-End Results.Business Editors ST. JOHN'S, Newfoundland Newfoundland, breed of dog Newfoundland, breed of massive, powerful working dog developed in Newfoundland, probably in the 17th cent., and later perfected in England. It stands from 25 to 28 in. (63.5–71. & LABRADOR Labrador: see Labrador-Ungava; Newfoundland and Labrador, Canada. Labrador Large peninsula, northeastern Canada. Divided between the provinces of Quebec and Newfoundland and Labrador, it occupies an area of about 625,000 sq mi (1,620,000 sq km). , Canada--(BUSINESS WIRE)--June 9, 2003 CHC Helicopter CHC Helicopter Corporation (sometimes known as Canadian Helicopter Corporation, Canadian Helicopters or Hélicoptères Canadiens) (TSX: FLY.SV.A TSX: FLY.MV.B NYSE: FLI) is the world’s largest global commercial helicopter operator. Corporation ("CHC CHC Chicago Cubs CHC Community Health Center CHC Chestnut Hill College (Philadelphia, Pennsylvania) CHC Congressional Hispanic Caucus CHC Community Health Council (UK National Health Service) ") (NYSE NYSE See: New York Stock Exchange :FLI FLI - Flash Lights Impressively. )(TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :FLY.A)(TSX:FLY.B) today announced audited results for the year ended April 30, 2003.
Financial Highlights
(in millions of Canadian dollars except per share amounts)
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Three Months Ended Year Ended
----------------------------------------------------------------------
(Restated)(1) (Restated)(1)
April 30, April 30, April 30, April 30,
2003 2002 2003 2002
(Unaudited) (Unaudited) (Audited) (Audited)
----------------------------------------------------------------------
Revenue $175.6 $159.7 $722.4 $617.8
EBITDA (2) 36.4 30.8 142.2 120.8
Net earnings
from operations (2) 18.9 13.0 70.0 47.3
Net earnings 22.9 13.0 66.1 47.3
Cash flow from operations 9.9 8.7 87.3 65.0
Per Share Information
Net earnings
from operations: (2)
Basic $0.91 $0.78 $3.38 $2.87
Diluted 0.84 0.71 3.12 2.62
Net earnings:
Basic $1.10 $0.78 $3.19 $2.87
Diluted 1.02 0.71 2.94 2.62
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(1) See Note 2 to the Condensed Consolidated Interim Financial
Statements
(2) See definitions under Non-GAAP Earnings Measures in Management's
Discussion and Analysis
Highlights -- Revenue for the quarter was $175.6 million, an increase of $15.9 million (10%) over the same quarter last year. -- EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the quarter was $36.4 million, an increase of $5.6 million (18%) over the same quarter last year. -- Net earnings from operations for the quarter ended April 30, 2003 were $18.9 million ($0.84 per share), a 45% increase over last year. -- This is the 14th consecutive quarter of record year-over-year earnings growth. -- During the fourth quarter the Company renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. five multi-year contracts with four major customers for the equivalent of 10 heavy aircraft in the North Sea for combined annual revenues of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $86.0 million. Investor Conference Call The CHC Helicopter Corporation 4th quarter/year-end Conference Call and webcast will take place Tuesday Tuesday: see week. , June June: see month. 10 at 10:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . To listen to the conference call, dial 416-695-9707 for local and overseas calls, or toll-free 1-888-334-7880 for calls from within North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . To hear a replay of the conference call, dial 416-252-1143, or toll-free 1-866-518-1010. The replay will be available until 5 p.m. EDT, June 17, 2003. The financial results and a webcast of the conference call will be available through CHC's website at http://www.chc.ca/fiscal.html. The webcast will be broadcast by CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network at http://www.corporateboardroom.com. CHC Helicopter Corporation is the world's leading provider of heavy and medium helicopter helicopter, type of aircraft in which lift is obtained by means of one or more power-driven horizontal propellers called rotors. When the rotor of a helicopter turns it produces reaction torque which tends to make the craft spin also. services to the global offshore oil and gas industry, with aircraft operating in 23 countries and a team of approximately 2,500 professionals worldwide. If you wish to be removed or included on the Company's distribution list, please call 709-570-0749 or e-mail communications@stjohns.chc.ca. This press release and management's discussion and analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial may contain projections and other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "safe harbour" provision of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. While these projections and other statements represent our best current judgment, they are subject to risks and uncertainties that could cause actual results to vary. These statements may involve risks and uncertainties including, but not limited to, factors detailed in CHC's Annual Report on Form 20-F and in other filings with the United States Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , or should underlying assumptions prove incorrect Incorrect means to not be correct and may also refer to:
Management's Discussion and Analysis of Financial Condition and Results of Operations - Three months ended April 30, 2003 Overview The following information should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Interim Financial Statements and related notes included in this interim report and in conjunction with the Company's 2002 Annual Audited Financial Statements, related notes and Management's Discussion and Analysis. The Company continued to produce strong financial results despite a reduction in North Sea activity levels during the quarter. Net earning from operations during the quarter were $18.9 million ($0.84 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of ) on revenue of $175.6 million compared to net earnings from operations of $13.0 million ($0.71 diluted earnings per share) on revenue of $159.7 million in the same quarter last year. Net earnings from operations improved quarter over quarter due to higher contract rates, lower interest costs and gains on asset disposals. Net earnings during the quarter were $22.9 million ($1.02 diluted earnings per share) compared to net earnings of $13.0 million ($0.71 diluted earnings per share) in the same quarter last year. Net earnings improved quarter over quarter due to the factors noted above in addition to a tax recovery recorded in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. because of a change in tax law. This was partially offset by an asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge related to the Company's composites manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. . Revenue increased by $15.9 million (10%) in the fourth quarter compared to last year and EBITDA improved 18% from $30.8 million to $36.4 million. Revenue Total revenue for the quarter was $175.6 million compared to revenue of $159.7 million for the same quarter last year. The following factors account for the change: -- A net increase in revenue of $2.9 million (2%) primarily as a result of new contracts and higher rates in all of the Company's markets partially offset by reduced revenue as a result of a decrease in flying activity of 2,128 flying hours (6.5%) this quarter compared to the same quarter last year. -- Increased third-party repair and overhaul revenue of $3.7 million primarily from large airframe projects for new and existing customers. -- A net revenue increase of $9.3 million related to foreign currency translation primarily due to the strengthening of the Norwegian Norwegian associated in some way with Norway. Norwegian buhund, Norwegian sheepdog a medium-sized (26-40 lb), spitz-type dog with a short, dense coat in wheaten, black, red or sable, sometimes with black markings on the face, ears kroner and pound sterling against the Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. dollar.
Revenue Summary by Quarter
(in millions of Canadian dollars)
----------------------------------------------------------------------
----------------------------------------------------------------------
Total Repair
Helicopter and
Period Europe International Operations Overhaul Composites Total
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Q1-F2002 $101.3 $36.9 $138.2 $8.2 $- $146.4
Q2-F2002 107.8 38.9 146.7 13.4 - 160.1
Q3-F2002 95.6 44.9 140.5 11.1 - 151.6
Q4-F2002 102.1 46.7 148.8 10.9 - 159.7
Q1-F2003 118.0 45.8 163.8 10.9 1.3 176.0
Q2-F2003 125.4 44.5 169.9 19.6 1.2 190.7
Q3-F2003 116.2 46.4 162.6 15.9 1.5 180.0
Q4-F2003 108.6 48.0 156.6 16.6 2.4 175.6
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Flying Hours The Company derives its helicopter operations revenue from two primary types of contracts. Approximately 60% of the Company's fiscal 2003 flying revenue was derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from hourly charges (including hourly charges on contracts that also have fixed charges), and the remaining 40% was generated by fixed monthly charges. Because of the significant fixed component, an increase or decrease in flying hours may not result in a proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. change in revenue. While flying hours may not correlate directly with revenue, they remain a good measure of activity level and fleet utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be . The following table provides a quarterly summary of the Company's flying hours and number of aircraft for the past eight quarters.
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Flying Hours - Helicopter Operations
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Flying Hours Number of Aircraft
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Period Europe Int'l Total Europe Int'l
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Q1-F2002 24,452 10,330 34,782 77 90
Q2-F2002 24,773 10,663 35,436 76 85
Q3-F2002 21,781 11,276 33,057 75 88
Q4-F2002 21,650 10,975 32,625 72 88
Q1-F2003 23,257 11,165 34,422 72 87
Q2-F2003 22,994 10,618 33,612 73 87
Q3-F2003 20,316 11,189 31,505 73 90
Q4-F2003 19,430 11,067 30,497 71 88
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The following table shows flying revenue mix by segment and in total
by aircraft type for fiscal 2003 and 2002.
Flying Revenue Mix
(in thousands of Canadian Dollars)
---------------------------------------------------------------------
April 30, 2003
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Heavy Medium Light Total
---------------------------------------------------------------------
Europe $335,841 $89,625 $- $425,466
International 50,680 118,357 8,043 177,080
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Total Flying
Revenue $386,521 $207,982 $8,043 $602,546
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Total % 64.2% 34.5% 1.3% 100%
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Flying Revenue Mix
(in thousands of Canadian Dollars)
---------------------------------------------------------------------
April 30, 2002
---------------------------------------------------------------------
Heavy Medium Light Total
---------------------------------------------------------------------
Europe $298,955 $75,957 $- $374,912
International 47,734 109,589 7,807 165,130
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Total Flying
Revenue $346,689 $185,546 $7,807 $540,042
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Total % 64.2% 34.4% 1.4% 100%
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Aberdeen Airport in the U.K. reports monthly helicopter passenger
traffic at the Company's largest base. The following table provides a
quarterly summary of all helicopter passenger traffic at Aberdeen
Airport for fiscal 2000 to 2003.
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Aberdeen Airport - Helicopter Passengers
Year ended April 30,
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2003 2002 2001 2000
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Q1 116,102 121,868 103,874 101,073
Q2 112,449 123,012 114,376 92,355
Q3 92,918 114,606 104,381 85,167
Q4 92,686 108,247 101,166 85,190
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414,155 467,733 423,797 363,785
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Source: Aberdeen Airport Ltd.
The data in this table shows that helicopter passenger activity has continued to decline in the fourth quarter compared to the same periods in fiscal 2002 and 2001. The rate of decline, however, has improved. In addition, the data demonstrates the modest level of seasonality in activity from quarter to quarter. Review of Operations Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Europe
EUROPEAN FLYING SEGMENT
(millions of CAD dollars)
---------------------------------------------------------------------
Q4-03 Q4-02 YTD-03 YTD-02
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Revenue $108.6 $102.1 $468.2 $406.8
---------------------------------------------------------------------
EBITDA 19.0 18.5 89.5 74.6
---------------------------------------------------------------------
EBITDA % 17.5% 18.1% 19.1% 18.3%
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Revenue from helicopter operations in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). was $108.6 million for
the quarter compared to $102.1 million last year. This net $6.5 million
(6.4%) increase quarter over quarter is the result of favourable foreign
exchange of $7.8 million due to strengthening foreign exchange rates for
the Norwegian kroner and pound sterling against the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin"loonie dollar - the basic monetary unit in many countries; equal to 100 cents offset partially by a decrease in revenue. Revenue only decreased $1.3 million (1.3%) quarter over quarter despite a reduction in flying activity by 2,220 hours (10.3%). Although flying revenue was negatively impacted by a general decrease in activity and the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of two contracts earlier this fiscal year, this was partially offset by the positive impact of new contracts and increased rates on existing contracts. The decrease in flying hours has been in response to reduced activity particularly by bp who have been deferring investment in certain oilfields in the North Sea that they have recently sold to other operators. The net increase in EBITDA of $0.5 million is due to a $1.4 million increase related to strengthening foreign exchange rates for the Norwegian kroner and pound sterling against the Canadian dollar offset by a decrease in EBITDA of $0.9 million. The decrease in EBITDA percentage for the quarter compared to the same period last year is primarily due to certain lower than normal operating costs experienced in the same quarter last year partially offset by the positive impact this quarter of rate increases and new contracts. The annual EBITDA percentage of 19.1% for 2003 is, however, ahead of the 18.3% margin experienced last year. Last quarter the Company announced that it had embarked on an internal cost review of its European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations. It was indicated that the Company's U.K. division had initiated a cost reduction program that would result in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. savings of $10.0 million. More than half of these cost savings measures have been implemented and completion is expected before the end of calendar 2003. With regard to the combined European structure, the Company is still in consultation with management and unions to develop a structure that will yield considerably more savings. The Company is challenging management and unions to develop more flexible cost structures that will improve its competitive position and ensure the Company can produce the overall return on capital required to support investment in new aircraft in the North Sea. During the quarter the Company negotiated a two-year contract extension with bp to provide the sole-use services of a new Super Puma AS332L2 ("MkII") helicopter and further support from the Company's Super Puma fleet in Stavanger Stavanger (stäväng`ər), city (1995 est. pop. 103,496), capital of Rogaland co., SW Norway, a port on the Stavangerfjord (an arm of the Boknfjord). . The service will support bp's production and drilling operations in the Valhall, Ula and Gyda fields off Norway Norway, Nor. Norge, officially Kingdom of Norway, constitutional monarchy (2005 est. pop. 4,593,000), 125,181 sq mi (324,219 sq km), N Europe, occupying the western part of the Scandinavian peninsula. . This contract extension, effective June 1, 2003, will generate revenues of $42.0 million over the contract term. In May 2003 bp announced the sale of its operating interest in the Gyda Norwegian field effective January January: see month. 1, 2003 (subject to government approval) to Talisman Energy Talisman Energy TSX: TLM is one of Canada's largest petroleum companies. It was originally part of British Petroleum, known as BP Canada, but in 1992 it became an independent company named Talisman Energy. Inc., a current customer of the Company. Activity related to this field represents approximately 10% of total revenue under the contract with bp. In addition the Company concluded a multi-year agreement with ExxonMobil Exxon Mobil Corporation or ExxonMobil (NYSE: XOM), a multi-national American corporation and a direct descendant of John D. Rockefeller's Standard Oil company[2] in March 2003 to provide the sole-use services of a new Super Puma MkII helicopter and a Super Puma AS332L in Aberdeen Aberdeen, former county, Scotland Aberdeen, former county, Scotland: see Aberdeenshire. Aberdeen, city, Scotland Aberdeen, city (1991 pop. to support ExxonMobil's production and drilling operations in the Northern Sector of the North Sea. The contract will commence with the delivery in July July: see month. 2003 of a new Super Puma MkII, the latest generation of heavy helicopters currently available. The contract represents an improved level of service and value over the existing contract which has been serviced primarily by the Company's pool of Super Puma AS332L aircraft. In March 2003 the Company was awarded a four-year contract renewal that commenced in April 2003 for the provision of helicopter services to TotalFinaElf Exploration U.K. PLC, with options for two additional years. The service will initially be provided using a Super Puma MkII sole-use aircraft supplemented by a Super Puma AS332L. In January 2004 a new Super Puma MkII aircraft will be replacing the AS332L at which time the Company will service TotalFinaElf with two latest technology Super Puma MkII's. In March 2003 the Company signed a two-year contract extension to support Talisman Energy (UK) Limited's production and drilling facilities in the North Sea. The contract calls for the provision of two dedicated Super Puma AS332L helicopters, plus additional services from the Company's pool of Super Puma AS332L helicopters.
International
INTERNATIONAL FLYING SEGMENT
(millions of CAD dollars)
---------------------------------------------------------------------
Q4-03 Q4-02 YTD-03 YTD-02
---------------------------------------------------------------------
Revenue $48.0 $46.7 $184.8 $167.4
---------------------------------------------------------------------
EBITDA 12.3 11.9 39.9 39.0
---------------------------------------------------------------------
EBITDA % 25.7% 25.6% 21.6% 23.3%
---------------------------------------------------------------------
Revenue for the quarter from International operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. was $48.0 million compared to $46.7 million last year. Revenue increased $1.8 million primarily due to new contracts and higher rates on existing contracts partially offset by revenue reduction upon the completion of the U.N. contracts in East Timor East Timor (tē`môr) or Timor-Leste (–lĕsht), Tetum Timor Lorosae, republic, officially Democratic Republic of Timor-Leste (2002 est. pop. in June and November November: see month. 2002 and decreased activity on the Philippines Philippines officially Republic of the Philippines Island country, western Pacific Ocean, on an archipelago off the southeast coast of Asia. Area: 122,121 sq mi (316,294 sq km). Population (2005 est.): 84,191,000. contract. This net revenue increase was partially offset by $0.5 million related to unfavourable foreign exchange. EBITDA increased from $11.9 million to $12.3 million quarter over quarter. The net increase of $0.4 million was the result of increased revenue and higher rates offset somewhat by unfavourable foreign exchange of $0.8 million. EBITDA percentage quarter over quarter improved slightly from 25.6% to 25.7% due primarily to the factors described above. During the quarter the Company's Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. division was awarded a three-year contract renewal for the provision of a dedicated AS332L1 Super Puma aircraft to Newfield Newfield can refer to:
In mid-March n. 1. the middle part of March. Noun 1. mid-March - the middle part of March period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" 2003 the contract with the U.N. Monitoring, Verification See verify. verification - The process of determining whether or not the products of a given phase in the life-cycle fulfil a set of established requirements. and Inspection Commission terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: early upon the start of the war in Iraq Iraq or Irak (both: ēräk`, ĭrăk`), officially Republic of Iraq, republic (2005 est. pop. 26,075,000), 167,924 sq mi (434,924 sq km), SW Asia. . This contract involved three owned and one leased B212 aircraft.
Repair and Overhaul
REPAIR AND OVERHAUL
(millions of CAD dollars)
---------------------------------------------------------------------
Q4-03 Q4-02 YTD-03 YTD-02
---------------------------------------------------------------------
Total revenue $50.0 $37.7 $204.9 $152.2
---------------------------------------------------------------------
Third-party revenue 16.6 10.9 63.0 43.6
---------------------------------------------------------------------
EBITDA 9.5 9.4 37.4 31.0
---------------------------------------------------------------------
EBITDA % (i) 18.9% 24.9% 18.3% 20.4%
---------------------------------------------------------------------
(i) EBITDA% is calculated as a percentage of total revenue (including
both internal and external third-party sales)
Total revenue from the repair and overhaul business during the quarter was $50.0 million compared to $37.7 million for the same period last year. Third-party revenue growth of $5.7 million is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a $3.7 million increase in large airframe projects for new and existing customers including major inspections, a slight increase in "power by the hour" revenue quarter over quarter and $2.0 million related to the strengthening of the Norwegian kroner upon translation of revenue into Canadian dollars. EBITDA remained constant with that experienced during the same period last year with favourable foreign exchange of $1.1 million upon translation being equally offset by a decrease in EBITDA. EBITDA percentage decreased quarter over quarter from 24.9% to 18.9% but was higher than the EBITDA percentage experienced in the second and third quarters this fiscal year at 17.8% and 17.2% respectively. EBITDA percentage was lower this quarter compared to the same period last year primarily due to unusually high margins last year, higher maintenance and labour costs and lower margins experienced on internal work this quarter. Composites Total fourth quarter revenue and EBITDA from the Company's composites manufacturing operations was $2.4 million and $0.2 million respectively. The results for Composites include a non-recurring revenue item. In April 2003, Composites entered into a five-year agreement with Aero Vodochody
Aero Vodochody (commonly referred to as Aero; Vodochody is a location) is a Czech (and Czechoslovak) aircraft company notable for producing the L-29 Delfin, L-39 A.S. of the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. for the provision of composite composite, alternate common name for Asteraceae or Compositae, the aster family. composite - aggregate aerospace components for the Sikorsky S76C+ helicopter of which Aero Vodochody is the exclusive airframe manufacturer. The agreement is expected to generate annual revenues of $5.0 million for five years. Under the terms of the agreement, Composites will provide approximately 122 different manufactured components to Aero Vodochody for the Sikorsky S76C+ aircraft. Preparation work and the installation of tooling equipment at Composites' facility in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of will take place in the summer and fall of 2003. Production is expected to begin by December December: see month. 2003. At April 30, 2003 the Company evaluated the recoverability from cash flows from future operations of the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of Composites pre-operating expenses included in other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. . The Company determined it appropriate to write down the entire book value of such pre-operating expenses at April 30, 2003 of $12.8 million as an asset impairment charge (Note 6 to the Condensed Consolidated Interim Financial Statements). The Company is still exploring strategic alternatives for Composites, including a sale of all or a portion of the business with the assistance of a financial advisor. Corporate and Other The Corporate and other segment recorded costs of $4.5 million compared to $9.0 million in the same quarter last year. The improvement quarter over quarter resulted from reduced compensation and travel costs of $2.2 million, aviation and other insurance reductions of $1.7 million, and a $0.6 million reduction in the settlement of an outstanding claim against the Company.
Financing Charges
Financing Charges
(in thousands of Canadian Dollars)
Three Months Ended
(Restated)
April 30, April 30,
2003 2002
----------------------------------------------------------------------
Interest on debt obligations $7,855 $9,707
Amortization of deferred financing costs 814 949
Foreign exchange loss (gain)
from operating activities
and working capital revaluation 2,058 (395)
Foreign exchange (gain)
loss on debt repayment (808) 550
Foreign exchange gain on
revaluation of long-term debt
(Note 2 to the Condensed
Consolidated Interim Financial Statements) (494) (688)
Other (958) 122
----------------------------------------------------------------------
Total $8,467 $10,245
----------------------------------------------------------------------
----------------------------------------------------------------------
Interest costs on debt obligations during the quarter were $7.9 million compared to $9.7 million last year. The reduction of $1.8 million is the result of lower interest rates and lower debt levels related to the Company's variable-rate Variable-rate A varible-rate agreement, as distinguished from a fixed-rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. senior credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities and a redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of 35% of its 11.75% senior subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes during the first quarter of 2003. The average interest rate on the Company's variable-rate senior credit facilities for the current quarter was 4.9% compared to 5.8% in the same period last year. Income Taxes Total income tax recovery recorded during the quarter was $11.5 million compared to total income tax expense of $3.0 million recorded in the same quarter last year. Income tax expense included in net earnings from operations was $5.3 million for the quarter. For the same quarter last year the Company reported income tax on earnings from operations of $3.0 million. The effective income tax rate on earnings from operations was 21.8% during fiscal 2003 compared to 17.3% in the prior year. The higher rate this year is the result of increased earnings in jurisdictions with higher tax rates. In addition, debt reduction has resulted in reduced interest costs in Canada, the Company's highest tax jurisdiction. During the quarter the Company had an income tax recovery of $14.0 million related to its Australian operations. The Government of Australia
Cash Flows, Liquidity and Capital Resources Operating Activities Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the quarter was $9.9 million, a $1.2 million (14.0%) increase over last year. Non-cash working capital increased by $10.5 million during the quarter in comparison to an increase of $1.1 million in the same quarter last year. In this quarter, excluding the impact of foreign exchange, receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed were reduced by $2.5 million, inventory increased by $9.4 million, prepaids were reduced by $0.6 million and accounts payable were reduced by $4.2 million. Inventory increased primarily in the Company's repair and overhaul segment in support of the Company's flying divisions as well as external customers. Accounts payable decreased primarily as a result of reduced trade payables Payables Related: Accounts payable levels in the Company's U.K. and International operations. Financing Activities The Company's net debt (net of cash) decreased by $41.4 million during the quarter from $304.6 million to $263.2 million. This reduction consists of net debt reductions (net of cash) of $24.3 million, in addition to the impact of foreign exchange on the translation of the Company's foreign denominated debt to Canadian dollars of $17.1 million. The foreign exchange impact was primarily related to the Company's pound sterling and Euro denominated debt that are hedges of the Company's investment in its self-sustaining self-sus·tain·ing adj. Able to sustain oneself or itself independently. self  -sus·tain European subsidiaries. As a result, revaluation RevaluationA calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. gains and losses on the debt and the net investments are offset in the shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. section of the balance sheet in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . As at April 30, 2003 the Company had unused credit facilities of $69.8 million and cash of $58.1 million, for a total of $127.9 million.
----------------------------------------------------------------------
----------------------------------------------------------------------
Change in Net Debt Position During Q4
(in thousands of Canadian dollars)
----------------------------------------------------------------------
Advances Foreign Exchange
Opening Balance (Repayments) Revaluation Ending Balance
----------------------------------------------------------------------
$304,643 (24,347) (17,132) $263,164
----------------------------------------------------------------------
----------------------------------------------------------------------
To minimize foreign exchange risk, the Company has denominated its
debt in various currencies to match net operating cash flows with debt
service obligations. As at April 30, 2003, the Company's net debt was
denominated in the following currencies:
Debt in Canadian
Currency Original Currency Equivalent
(000's) (000's)
----------------------------------------------------------------------
Pound sterling pounds sterling 55,197 $126,621
Euro euro 94,250 151,111
Canadian dollar CDN 16,373 16,373
Norwegian kroner NOK 132,500 27,163
Cash (various currencies) (58,104)
----------------------------------------------------------------------
Total Reported Net Debt $263,164
Investing Activities Capital expenditures of $12.7 million during the quarter included $6.7 million in aircraft modifications A change in the physical characteristics of aircraft, accomplished either by a change in production specifications or by alteration of items already produced. , $0.8 million in building additions, $3.2 million in helicopter spare components, $1.0 million related to new information systems software and $1.0 million in other equipment. In addition, the Company incurred expenditures of $2.3 million related to helicopter major inspections. The Company recorded amortization of helicopter component costs of $28.1 million compared to component expenditures of $27.0 million for a net of $1.1 million. All major component repair and overhaul expenditures including major inspections are capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. and expensed over their period of future benefit as described in Note 1 to the Company's 2002 Annual Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . Foreign Currency The Company's reporting currency Reporting Currency The currency used in published reports and financial documents. Notes: All annual and quarterly reports state the currency in which their results are listed. is the Canadian dollar. However, the majority of revenue and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are denominated in pound sterling, Norwegian kroner, Australian dollars Noun 1. Australian dollar - the basic unit of money in Australia and Nauru dollar - the basic monetary unit in many countries; equal to 100 cents and South African rand “ZAR” redirects here. For the former republic, see South African Republic. The rand is the currency of South Africa. It takes its name from the Witwatersrand (White-waters-ridge , the functional and reporting currencies of the Company's principal foreign operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. . During the quarter, revenue was favourably Adv. 1. favourably - showing approval; "he reviewed the play favorably" favorably favourably U.S. favorably adverb 1. impacted by $9.3 million primarily due to the strengthening of the European currencies relative to the Canadian dollar. The impact of foreign exchange on EBITDA for the quarter was favourable by $1.7 million. Since interest expense, depreciation, income tax expense, capital expenditures and debt repayments are also generally in European currencies and U.S. dollars, the net impact of foreign exchange on earnings and cash flow is not as significant. During and subsequent to the quarter the Canadian dollar has strengthened relative to the U.S. dollar and the reporting currencies of the Company's European operations. If this strengthening continues it will impact the Company's financial performance in the next fiscal year. The Company's overall approach to managing foreign currency exposures includes identifying and quantifying its currency exposures and putting in place the necessary financial instruments to manage the exposures. In managing this risk, the Company may use financial instruments including forwards, swaps, and other derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. . Company policy specifically prohibits the use of derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. for speculative Speculative Securities that involve a high level of risk. speculative Of or relating to an asset or a group of assets with uncertain returns. The greater the degree of uncertainty the more speculative the asset. purposes. Fleet At April 30, 2003 the Company's fleet consisted of 114 owned and 45 leased aircraft. An additional 143 aircraft are employed in the Company's 43.5% owned Canadian onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. helicopter operations for a total of 302. The Company employs 71 aircraft in Europe, (primarily in the North Sea) and 88 in its other international markets.
----------------------------------------------------------------------
----------------------------------------------------------------------
Fleet Summary
----------------------------------------------------------------------
Heavy Medium Light Total Owned Leased
----------------------------------------------------------------------
Fleet at January 31, 2003 71 78 14 163 119 44
Increases (decreases)
during the period:
Total loss - S76 (1) (1) (1)
Sale-leaseback - AS332Ls (4) 4
Return of short-term
leased aircraft (2) (1) (3) (3)
----------------------------------------------------------------------
Fleet at April 30, 2003 69 76 14 159 114 45
----------------------------------------------------------------------
----------------------------------------------------------------------
During the quarter an S76 aircraft supporting operations In amphibious operations, those operations conducted by forces other than those conducted by the amphibious force. See also amphibious force; amphibious operation. in Azerbaijan Azerbaijan, country, Asia Azerbaijan (ä'zərbījän`, ă'zər–), Azeri Azərbaycan, officially Republic of Azerbaijan, republic (2005 est. pop. 7,912,000), 33,428 sq mi (86,579 sq km), in Transcaucasia. incurred a total loss when it landed heavily during a training exercise, rupturing the fuel tanks which caused a fire. There were no serious injuries experienced by the crew. The Company recovered the fair value of this aircraft through insurance proceeds and realized a gain of $2.6 million. At the end of April the Company entered into a sale-leaseback sale-lease·back n. See leaseback. transaction involving four AS332L aircraft operating in Europe. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $36.4 million are reflected as a reduction in net debt. During the quarter the Company made aircraft operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. payments of $10.8 million compared to $11.6 million in the same period last year. As at April 30, 2003, there were six additional leased aircraft compared to the same period last year with four of these new leases starting late April 2003. Although there has been an increase in the number of leased aircraft, this has been partially offset by lower payments on existing leases due to lower floating interest rates and more favourable foreign exchange rates. The Company has entered into operating leases with third-party lessors in respect of 45 aircraft included in the Company's fleet at April 30, 2003. Forty-three of these leases are long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. with expiry dates expiry date expire n → date f d'expiration; (on label) → à utiliser avant ... expiry date expire n → Ablauftermin m ranging from 2003 to 2010 while the other two are leased on a monthly basis. The Company has an option to purchase the aircraft at market value or agreed amounts at the end of some of the long-term leases, but has no commitment to do so.
The minimum lease payments required under these aircraft operating
leases are as follows (based on April 30, 2003 exchange rates):
2004 $42.4 million
2005 35.7 million
2006 30.5 million
2007 22.3 million
2008 16.5 million
and thereafter: 25.2 million
-----------------------------------------------------------
Total $172.6 million
-----------------------------------------------------------
-----------------------------------------------------------
In addition to aircraft leases, the Company has approximately $4.8 million in average annual lease commitments for land, buildings and non-aircraft equipment. As at April 30, 2003, the Company had deposits with Eurocopter The Eurocopter Group is a global helicopter manufacturing and support company formed in 1992 from the merger of the helicopter divisions of French Aérospatiale and German DaimlerChrysler Aerospace AG (DASA). to secure delivery positions on up to five new Super Puma MkII aircraft and two EC225 helicopters through to fiscal 2005. The Company has some flexibility built into the delivery schedule for these aircraft in order to match acquisitions with new demand. The next delivery of a new Super Puma MkII is at the end of June 2003. The Company plans to acquire this aircraft through an operating lease. The Company also has ordered four new medium helicopters for its international operations for delivery in December 2003. These aircraft will be used in Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. and in Africa to meet increased demand by customers for newer medium aircraft with existing helicopters being re-deployed to other projects in these operations. The Company has operating leases with a number of different banks and leasing companies. During the quarter the Company entered into a sale-leaseback with a Variable Interest Entity ("VIE") for four aircraft. The Company's relationship with this VIE has been evaluated under the new Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). ("FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). ") standard in the United States. In applying this standard the Company has concluded it is not required to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. this VIE. At April 30, 2003, the Company was leasing 17 aircraft under operating leases from eight VIEs. The operating leases with these VIEs contain terms and conditions which are substantially the same as the Company's other aircraft operating leases. Based on an independent appraisal as at April 30, 2003, the fair market value of the Company's owned aircraft fleet was U.S. $365.5 million (CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $523.9 million), exceeding its recorded net book value by approximately CDN $185.1 million. The decrease in the appraisal surplus of $38.2 million from January 31, 2003 is primarily due to a change in the U.S.-Canadian dollar exchange rate and the realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of the appraisal surplus on the disposal of an S76 aircraft and the sale-leaseback of four AS332L helicopters in the fourth quarter. Defined Benefit Employee Pension Plans Approximately one-third of the Company's active employees are covered by defined benefit pension plans. The plans in the U.K. are closed to new members. At April 30, 2003 the Company had unfunded deficits of $72.8 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc defined benefit pension plans that are required to be funded compared to $59.3 million at January 31, 2003, an increase of $13.5 million. Of the $72.8 million unfunded deficits, $55.7 million and $17.1 million are related to plans in the U.K. and Norway respectively. In addition the Company has a deficit of $34.4 million related to plans that do not require funding. The unfunded deficits relating to funded plans increased $70.5 million during fiscal 2003. This has been the result of weak performance in the world's financial markets and changes in actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin assumptions as at April 30, 2003. Investment performance has been at or near the relevant benchmarks. Pension expense for fiscal 2003 was $16.1 million, compared to $14.1 million for fiscal 2002. At April 30, the Company undertook a complete review of the performance of the pension plans in 2003 and the appropriate assumptions. This review, with the assistance of the Company's actuaries, resulted in a change in key assumptions, including the weighted average discount rate, rate of compensation increase, and long-term expected rate of return expected rate of return The rate of return expected on an asset or a portfolio. The expected rate of return on a single asset is equal to the sum of each possible rate of return multiplied by the respective probability of earning on each return. on plan assets from 6.53%, 2.63% and 7.22% at April 30, 2002, to 5.78%, 3.37% and 6.89% at April 30, 2003 respectively. These assumption changes resulted in an estimate of pension expense for fiscal 2004 of $27.4 million. The estimated increase of $11.3 million from fiscal 2003 relates to a $5.7 million increase in the amortization of net actuarial and experience losses and $5.6 million due to assumption changes. While the asset mix varies in each plan, overall the asset mix is 38.4% equities, 20.1% fixed income, and 41.5% money market as at April 30, 2003. Commodity Prices For the year ended April 30, 2003, the Company derived approximately 85% of its flying revenue from the oil and gas industry. Approximately 82% of revenue from this industry was derived from the relatively stable production sector which tends to be substantially unaffected by short- term fluctuations in oil and gas prices. Approximately 12% of the Company's flying revenue in the North Sea is derived from exploration activity. Safety Safety is a primary focus of all activities performed by the Company. The Company believes it has one of the best safety records in the industry, as evidenced by its low incident rate and insurance premiums. There was one safety incident during the quarter involving a total loss of an S76 aircraft during a training exercise with no serious injuries experienced by the crew. Effective November 2002, the Company's main hull and liability insurance policy was renewed at rate increases which were lower than the industry generally, reflecting the Company's excellent safety record and reduced incident experience. Market intelligence supports our continued belief that the Company has the lowest, or among the lowest, insurance rates in the industry for its medium and heavy fleet. Seasonality The Company's revenues and earnings are primarily derived from oil and gas exploration and production activities and are not subject to significant seasonal variations. There are, however, seasonal variations in earnings from the Company's 43.5% investment in the onshore operations of Canadian Helicopters Limited. Normal Course Issuer Bid During the fourth quarter, a normal course issuer bid was filed by the Company, allowing the Company to purchase, if considered advisable ad·vis·a·ble adj. Worthy of being recommended or suggested; prudent. ad·vis a·bil ,
up to a maximum of 1,299,458 of its Class A subordinate voting shares Voting SharesShares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. . Any purchases under the normal course issuer bid are made in the open market through the facilities of the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. ("TSX") and all shares repurchased by the Company are cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. . As at April 30, 2003, under the normal course issuer bid, the Company had not purchased any Class A subordinate voting shares. The normal course issuer bid remains in effect until March 11, 2004 (or such earlier date as the Company may complete its purchases). Corporate Governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. In response to evolving corporate governance practices, changes to New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. and Toronto Stock Exchange rules and guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. and the Company's desire to adhere to adhere to verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful 2. high standards of Corporate governance, the Company will be adopting new corporate governance guidelines. During the quarter, the Board of Directors of the Company decided that the Board should be comprised of unrelated directors in proportion to the economic interests of non-controlling shareholders. As a result, the Board of Directors has announced that five Directors who are either related, or perceived per·ceive tr.v. per·ceived, per·ceiv·ing, per·ceives 1. To become aware of directly through any of the senses, especially sight or hearing. 2. To achieve understanding of; apprehend. to be related, will not seek re-election re-election n → reelección f re-election n → réélection f re-election n → Wiederwahl f at the next annual general meeting of the Company in September September: see month. 2003. The Company will describe other corporate governance changes in detail in its 2003 Information Circular Information Circular A document sent to shareholders outlining important matters to be discussed at the annual shareholders' meeting. Notes: Sent along with a proxy, the information circular may cover matters such as the election of the Board of Directors, possible . Non-GAAP Earnings Measures The Company uses certain earnings measures that do not have standard definitions prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and therefore may not be comparable to similar measures presented by other companies. The Company has included these measures because they are used by management and certain investors as measures of the Company's financial performance. These measures and their objectives, as used by the Company, are defined as follows: EBITDA is defined as earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. . EBITDA is used as a measure of operational performance. Net earnings from operations are defined as net earnings excluding large non-recurring items including gains and losses on the sale of businesses, asset impairment charges and debt settlement costs, net of applicable income tax, and special income tax recoveries. Net earnings from operations is used as a measure of the Company's ability to generate net earnings from normal, continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the without non- non- word element [L.]not . non- pref. Not: noninvasive. recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. special items that may or may not occur in the future and is used by some investors as one predictor of future financial performance.
---------------------------------------------------------------------
Reconciliation of Non-GAAP Earnings Measures to GAAP Net Earnings
(in thousands of Canadian dollars except per share amounts)
Three Months Ended Year Ended
---------------------------------------------------------------------
(Restated) (Restated)
(1) (1)
April 30, April 30, April 30, April 30,
2003 2002 2003 2002
(Unaudited)(Unaudited) (Audited) (Audited)
---------------------------------------------------------------------
Earnings from operations
before taxes and debt
settlement costs
(from statement of
earnings) $11,386 $16,038 $76,692 $57,192
Asset impairment charge 12,811 - 12,811 -
Applicable income taxes
on operations (5,337) (3,046) (19,491) (9,900)
---------------------------------------------------------------------
Net earnings from
operations 18,860 12,992 70,012 47,292
After-tax debt
settlement costs - - (7,916) -
After-tax asset
impairment charge (9,939) - (9,939) -
Tax recovery
Australia 13,976 - 13,976 -
---------------------------------------------------------------------
Net earnings $22,897 $12,992 $66,133 $47,292
---------------------------------------------------------------------
Three Months Ended Year Ended
---------------------------------------------------------------------
Restated(1)
April 30, April 30, April 30, April 30,
2003 2002 2003 2002
(Unaudited)(Unaudited) (Audited) (Audited)
---------------------------------------------------------------------
Net earnings from
operations per share
information:
Net earnings from
operations $18,860 $12,992 $70,012 $47,292
Weighted average
number of shares 20,829 16,689 20,728 16,464
Basic net earnings
from operations per
share $0.91 $0.78 $3.38 $2.87
---------------------------------------------------------------------
---------------------------------------------------------------------
Net earnings from
operations $18,860 $12,992 $70,012 $47,292
Effect of dilutive
securities 117 127 478 516
---------------------------------------------------------------------
$18,977 $13,119 $70,490 $47,808
Weighted average
number of shares 22,565 18,576 22,621 18,279
Diluted net earnings
from operations per
share $0.84 $0.71 $3.12 $2.62
---------------------------------------------------------------------
---------------------------------------------------------------------
(1) See Note 2 to the Condensed Consolidated Interim Financial Statements Summary financial data - U.S. Dollars Certain summary financial data from the Condensed Consolidated Interim Financial Statements, as detailed below, has been translated into U.S. dollars. This translation is included solely as supplemental information for the convenience of the reader. The data has been translated at the exchange rate at April 30, 2003 of CAD CAD: see computer-aided design. (Computer-Aided Design) Using computers to design products. CAD systems are high-speed workstations or desktop computers with CAD software. $1.4335 = U.S. $1.00.
Financial Highlights
(in millions of U.S. dollars except per share amounts)
----------------------------------------------------------------------
----------------------------------------------------------------------
Three Months
Ended Year Ended
April 30, April 30,
2003 2003
(Unaudited) (Audited)
----------------------------------------------------------------------
Revenue $122.5 $503.9
EBITDA 25.4 99.2
Net earnings from operations 13.2 48.8
Net earnings 16.0 46.1
Cash flow from operations 6.9 60.9
Per Share Information
Net earnings from operations:
Basic $0.63 $2.36
Diluted 0.59 2.18
Net earnings:
Basic 0.77 2.23
Diluted 0.71 2.05
----------------------------------------------------------------------
----------------------------------------------------------------------
CHC Helicopter Corporation
Consolidated Statements of Earnings
(in thousands of Canadian dollars except per share amounts)
---------------------------------------------------------------------
Three Months Ended Year Ended
(Restated) (Restated)
(Note 2) (Note 2)
April 30, April 30, April 30, April 30,
2003 2002 2003 2002
(Unaudited)(Unaudited) (Audited) (Audited)
---------------------------------------------------------------------
Revenue $175,646 $159,699 $722,363 $617,816
Operating expenses 139,202 128,871 580,150 496,993
---------------------------------------------------------------------
Earnings before
undernoted items 36,444 30,828 142,213 120,823
Depreciation and
amortization (6,011) (5,156) (22,585) (18,622)
Gain on disposal of
assets 2,842 249 2,413 1,859
---------------------------------------------------------------------
Earnings from
operations before
asset impairment
charge 33,275 25,921 122,041 104,060
Asset impairment
charge (Note 6) (12,811) - (12,811) -
---------------------------------------------------------------------
Earnings from
operations 20,464 25,921 109,230 104,060
Financing charges (8,467) (10,245) (34,878) (47,979)
Equity in (losses)
earnings of
associated companies (611) 362 2,340 1,111
---------------------------------------------------------------------
Earnings from
operations before
undernoted item and
income taxes 11,386 16,038 76,692 57,192
Debt settlement
costs - - (12,464) -
---------------------------------------------------------------------
Earnings before
income taxes 11,386 16,038 64,228 57,192
Income taxes
recovery (provision) 11,511 (3,046) 1,905 (9,900)
---------------------------------------------------------------------
Net earnings $22,897 $12,992 $66,133 $47,292
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per share
(Note 8)
Basic $1.10 $0.78 $3.19 $2.87
Diluted 1.02 0.71 2.94 2.62
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation
Consolidated Statements of Shareholders' Equity
(in thousands of Canadian dollars except per share amounts)
----------------------------------------------------------------------
----------------------------------------------------------------------
(Restated)
(Note 2)
Year Ended Year Ended
April 30, April 30,
2003 2002
(Audited) (Audited)
----------------------------------------------------------------------
Retained earnings, beginning of year
as originally stated $117,280 $70,704
Retroactive application of change
in accounting policy with restatement
of prior periods (Note 2) 180 (536)
Retroactive application of change
in accounting policy without
restatement of prior periods (Note 2) (1,715) -
----------------------------------------------------------------------
Retained earnings, beginning of year
as restated 115,745 70,168
Net earnings 66,133 47,292
Dividends paid (4,016) -
----------------------------------------------------------------------
Retained earnings, end of year 177,862 117,460
Capital stock (Note 7) 236,962 236,007
Contributed surplus 3,291 3,291
Foreign currency translation adjustment (3,884) (24,006)
----------------------------------------------------------------------
Total shareholders' equity $414,231 $332,752
----------------------------------------------------------------------
----------------------------------------------------------------------
Dividends paid per participating voting share $0.20 $-
----------------------------------------------------------------------
----------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation
Consolidated Balance Sheets
(in thousands of Canadian dollars)
As at
----------------------------------------------------------------------
----------------------------------------------------------------------
(Restated)
(Note 2)
April 30, April 30,
2003 2002
(Audited) (Audited)
----------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $58,104 $112,838
Receivables 139,587 146,972
Future tax assets 11,001 9,206
Inventory 214,656 174,150
Prepaid expenses 18,449 15,323
----------------------------------------------------------------------
441,797 458,489
Property and equipment, net 537,318 544,169
Long-term investments 21,043 18,717
Other assets 127,535 133,143
Long-term future tax assets 17,877 9,733
----------------------------------------------------------------------
$1,145,570 $1,164,251
----------------------------------------------------------------------
----------------------------------------------------------------------
Liabilities
Current liabilities
Payables and accruals $136,743 $140,403
Income taxes payable 3,993 4,985
Current portion of debt obligations 20,369 113,387
----------------------------------------------------------------------
161,105 258,775
Long-term debt 139,374 167,202
Senior subordinated notes 151,111 133,034
Subordinated debentures 10,414 11,157
Other credits 59,299 51,398
Future tax liabilities 210,036 209,933
Shareholders' equity 414,231 332,752
----------------------------------------------------------------------
$1,145,570 $1,164,251
----------------------------------------------------------------------
----------------------------------------------------------------------
See accompanying notes
CHC Helicopter Corporation
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars except per share amounts)
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Three Months Ended Year Ended
(Restated) (Restated)
(Note 2) (Note 2)
April 30, April 30, April 30, April 30,
2003 2002 2003 2002
(Unaudited)(Unaudited) (Audited) (Audited)
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Operating activities
Net earnings $22,897 $12,992 $66,133 $47,292
Items not involving cash:
Depreciation and
amortization 6,011 5,156 22,585 18,622
Gain on disposal of
assets (2,842) (249) (2,413) (1,859)
Asset impairment charge 12,811 - 12,811 -
Equity in losses (earnings)
of affiliated companies 611 (362) (2,340) (1,111)
Future income taxes (15,556) (56) (12,125) 4,811
Non-cash financing charges (1,494) 496 168 3,334
Debt settlement - - 12,464 -
Defined benefit
pension plan (12,488) (8,547) (10,934) (4,003)
Other (21) (721) 909 (2,037)
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Cash flow from operations 9,929 8,709 87,258 65,049
Change in non-cash
working capital (10,473) (1,085) (26,492) (15,561)
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(544) 7,624 60,766 49,488
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Financing activities
Long-term debt advances 74,872 47,046 118,154 100,748
Long-term debt repayments (92,732) (64,802) (241,320) (156,295)
Debt settlement - - (9,136) -
Dividends paid - - (4,016) -
Capital stock issue 268 114,123 596 114,504
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(17,592) 96,367 (135,722) 58,957
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Investing activities
Property and equipment
Additions (12,744) (12,260) (44,669) (37,307)
Helicopter major
inspections (2,332) (2,944) (13,384) (9,913)
Helicopter components, net 1,132 (3,177) 4,042 (11,268)
Proceeds from disposal 45,442 5,748 74,865 49,758
Long-term receivables 191 581 7,386 (2,342)
Pre-operating expenses (1,359) (1,931) (3,113) (7,419)
Other (5,472) 244 (6,622) (499)
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24,858 (13,739) 18,505 (18,990)
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Effect of exchange rate
changes on cash and
cash equivalents (1,550) 989 1,717 (167)
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Change in cash and cash
equivalents during the
period 5,172 91,241 (54,734) 89,288
Cash and cash equivalents,
beginning of period 52,932 21,597 112,838 23,550
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Cash and cash equivalents,
end of period $58,104 $112,838 $58,104 $112,838
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Cash interest paid $6,465 $5,047 $37,525 $44,645
Cash taxes paid $4,045 $3,102 $10,217 $5,089
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See accompanying notes
CHC Helicopter Corporation Notes to the Condensed Consolidated Interim Financial Statements for the periods ended April 30, 2003 and 2002 (Tabular tab·u·lar adj. 1. Having a plane surface; flat. 2. Organized as a table or list. 3. Calculated by means of a table. tabular resembling a table. amounts in thousands of Canadian dollars except per share amounts) 1. Basis of presentation The condensed consolidated interim financial statements ("Statements") have been prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"). Not all disclosures required by GAAP for annual financial statements are presented and thus the Statements should be read in conjunction with the annual audited financial statements. Certain amounts on the financial statements for the period ended April 30, 2002 have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the presentation in the current period. These interim financial statements follow the same accounting policies and methods of application as the most recent annual audited financial statements of April 30, 2002 except as described in Note 2 below. 2. Accounting policy changes Translation of foreign currencies Effective May 1, 2002 the Company retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin adopted with restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of individual prior periods the new Canadian New Canadian Noun Canad a recent immigrant to Canada accounting recommendations with respect to foreign currency translation which conform substantially to United States Generally Accepted Accounting Principles ("U.S. GAAP"). These recommendations require that unrealized exchange gains and losses on the translation of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. that has not been designated as a hedge of the Company's net investment in self-sustaining foreign operations be included in earnings immediately. The impact of the adoption of the new recommendations was a $0.5 million decrease in opening retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. at May 1, 2001, an increase in other assets of $0.2 million as at April 30, 2002 and a decrease in financing charges (net of taxes) of $0.7 million for fiscal 2002. In addition, May 1, 2002 opening retained earnings were increased by $0.2 million. Stock-based compensation plans Effective May 1, 2002 the Company retroactively adopted without restatement of prior periods the new Canadian accounting recommendations with respect to stock-based compensation which now conform substantially to U.S. GAAP. The recommendations require the use of a fair value based approach to accounting for specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. stock- based compensation awards including the Company's Stock Appreciation Rights Plan and Long-term Incentive Plan (SARs SARS or severe acute respiratory syndrome, communicable viral disease that can progress to a potentially fatal pneumonia. The first symptoms of SARS are usually a high fever, headache and body aches, sore throat, and mild respiratory symptoms; ). The impact of adopting the new recommendations related to the Company's SARs granted prior to May 1, 2002 was a charge against retained earnings of $1.7 million, the recording of a long-term future tax asset of $1.0 million and an increase of $2.7 million in payables and accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. . The recommendations require that compensation expense related to share options be calculated under the fair value method or the intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. based method with pro-forma disclosure on net earnings and earnings per share had the fair value method been used. The Company applies the intrinsic value based method to account for share options and accordingly has not recognized compensation cost for the share option plan. 3. Variable interest entities At April 30, 2003 the Company operated seventeen Seventeen novel of young love. [Am. Lit.: Booth Tarkington Seventeen in Magill I, 882] See : Adolescence aircraft under operating leases with eight entities that would be considered variable interest entities ("VIEs") under current generally accepted accounting principles ("GAAP") in the United States. These leases are at terms and conditions similar to the Company's other operating leases over periods ranging from 2004 to 2010. Canadian guidance on this issue ("Accounting Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. 15") has recently been finalized See finalization. and is consistent with the provisions contained in U.S. GAAP with regard to the disclosure and consolidation requirements for VIEs. The current United States GAAP, FASB Interpretation No. 46 ("FIN fin, organ of locomotion characteristic of fish and consisting of thin tissue supported by cartilaginous or bony rays. In some fish, e.g., the eel, a single fin extends from the back, around the tail, and along the ventral surface. 46"), at April 30, 2003 was effective for all VIEs created after January 31, 2003, and will be effective for those VIEs created prior to January 31, 2003 for the Company's interim period commencing August 1, 2003. The Canadian guidance applies to all annual and interim periods beginning on or after January 1, 2004. Included in the seventeen aircraft leased from VIEs at April 30, 2003 are four aircraft leased from a VIE that was created subsequent to January 31, 2003. The Company has concluded it is not required to consolidate the VIE in its consolidated financial statements. The remaining thirteen aircraft are leased from seven VIEs created on or before January 31, 2003. The application of the effective GAAP to these VIEs had no impact on the Company's financial statements. The Company will complete an analysis of the effects of FIN 46 on these VIEs prior to August 1, 2003 based on the terms and conditions then in effect and account for them accordingly. Based on the analysis completed to date, the Company does not anticipate that the application of FIN 46 to these VIEs will have any significant impact on the Company's financial statements. The fair market value of the seventeen aircraft leased from the VIEs at April 30, 2003, based on an independent appraisal, was $241.1 million. The Company has provided junior loans, advance rentals and asset value guarantees in connection with operating leases with these VIEs. The Company has also entered into remarketing agreements for the aircraft leased from the VIEs. The Company's maximum exposure to loss as a result of its involvement with the VIEs is $19.4 million. 4. Segment information The Company's operations are segregated into five reportable segments. The segments are European flying operations, International flying operations, Repair and overhaul operations, Composites manufacturing and Corporate and other.
Three Months Ended Year Ended
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April 30, April 30, April 30, April 30,
2003 2002 2003 2002
(Unaudited)(Unaudited) (Audited) (Audited)
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Revenue - external
Europe(1) $108,600 $102,112 $468,164 $406,767
International(2) 48,018 46,651 184,784 167,437
Repair and overhaul(3) 16,609 10,936 62,989 43,612
Composites(4) 2,419 - 6,426 -
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175,646 159,699 722,363 617,816
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Inter-segment revenues
Europe 4,579 4,045 17,338 14,774
International 3,151 - 12,902 217
Repair and overhaul 33,411 26,739 141,861 108,589
Corporate and other(5) 3,463 - 13,852 2,342
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44,604 30,784 185,953 125,922
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Earnings before interest,
taxes, depreciation
and amortization
("EBITDA")
Europe 19,000 18,484 89,542 74,633
International 12,320 11,935 39,867 38,986
Repair and overhaul 9,462 9,376 37,390 31,015
Composites 157 - (3,175) -
Corporate and other (4,495) (8,967) (21,411) (23,811)
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36,444 30,828 142,213 120,823
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Earnings from operations
Europe 15,893 15,476 77,414 64,113
International 11,115 11,060 35,783 35,440
Repair and overhaul 9,227 9,098 36,534 30,080
Composites (13,181) - (18,086) -
Corporate and other (2,590) (9,713) (22,415) (25,573)
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20,464 25,921 109,230 104,060
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Notes: 1. Europe - includes the flying divisions based in Aberdeen, Scotland Scotland, political division of Great Britain (1991 pop. 4,957,000), 30,414 sq mi (78,772 sq km), comprising the northern portion of the island of Great Britain and many surrounding islands. and Stavanger, Norway. 2. International - includes operations in Australia, Africa, Asia, offshore work in Eastern Canada Eastern Canada (also the Eastern provinces) is the region of Canada generally considered to be east of Manitoba, consisting of the following provinces:
5. Employee pension plans The Company maintains defined benefit and defined contribution pension plans for substantially all of its employees. Selected summary information about the Company's defined benefit pension plans, in aggregate, as compared to January 31, 2003 and April 30, 2002 is as follows:
As at
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April 30, January 31, April 30,
2003 2003 2002
(Audited) (Unaudited) (Audited)
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Benefit obligation $423,902 $396,597 $344,102
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Fair value of plan assets $316,674 $309,353 $312,484
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Funded status
Defined benefit
plans - funded (1) $(72,829) $(59,280) $(2,323)
Defined benefit
plans - unfunded (2) (34,399) (27,964) (29,295)
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Total (107,228) (87,244) (31,618)
Unrecognized net actuarial
and experience losses,
prior service costs
and transition amounts 172,272 145,447 85,869
Pension guarantee deposits 2,767 2,951 2,540
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Net asset recognized
on the balance sheet $67,811 $61,154 $56,791
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(1) Funded plans require contributions to be made by the Company. (2) Unfunded plans do not require contributions from the Company. Of the net asset recognized on the balance sheet at April 30, 2003, $84.0 million (April 30, 2002 - $69.1 million) related to the funded plans is recorded in other assets and $16.2 million (April 30, 2002 - $12.4 million) related to the unfunded plans is recorded as an accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. pension obligation in other credits. The significant weighted average actuarial assumptions adopted in measuring the Company's defined benefit pension plan obligations as at April 30 are as follows:
2003 2002
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Discount rate 5.78% 6.53%
Rate of compensation increase 3.37% 2.63%
The significant weighted average actuarial assumptions adopted in
measuring the Company's net defined benefit pension plan expense
during the year are as follows:
2003 2002
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Discount rate 6.59% 6.27%
Expected long-term rate
of return on plan assets 7.27% 7.22%
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6. Asset impairment charge The Company recorded a $12.8 million charge at April 30, 2003 in the composites manufacturing segment. The amount relates to a charge for impairment in the entire carrying value of the segment's pre-operating expenses included in other assets. 7. Capital stock
Authorized:
Unlimited number of each of the following:
First preferred shares, issuable in series
Second preferred shares, issuable in series
Class A subordinate voting shares
Class B multiple voting shares
Ordinary shares
Number of Shares
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April 30, April 30,
2003 2002
(Audited) (Audited)
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Issued:
Class A subordinate voting shares 17,918 17,689
Class B multiple voting shares 2,955 2,978
Ordinary shares 11,000 11,000
Securities convertible into Class A
subordinate voting shares:
Class B multiple voting shares 2,955 2,978
Share options 1,996 1,427
Convertible debt 690 795
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8. Per share information
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Three Months Ended April 30, 2003
(Unaudited)
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Weighted
average Net
Net number of earnings
earnings shares per share
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Basic $22,897 20,829 $1.10
Effect of dilutive securities:
Share options - 1,046
Convertible debt 117 690
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Diluted $23,014 22,565 $1.02
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Three Months Ended April 30, 2002
(Unaudited)
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Weighted
average Net
Net number of earnings
earnings shares per share
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Basic $12,992 16,689 $0.78
Effect of dilutive securities:
Share options - 1,092
Convertible debt 127 795
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Diluted $13,119 18,576 $0.71
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Under the treasury stock method, the proceeds from the exercise of options and warrants are assumed to be used to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. the Company's stock on the open market. The difference between the number of shares assumed purchased and the number of options and warrants assumed exercised is added to the number of basic shares outstanding to determine diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding for purposes of calculating diluted earnings per share. Therefore, the number of shares in the diluted earnings per share calculation will increase as the share price increases. 9. Share option plan The Company uses the intrinsic value based method to account for share options. If the fair value method had been used to account for share options issued during the year ended April 30, 2003, the pro-forma impact on net earnings and earnings per share would have been as follows:
Three Months Year
Ended Ended
April 30, April 30,
2003 2003
(Unaudited) (Audited)
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Net earnings
As reported $22,897 $66,133
Pro-forma 22,285 61,050
Basic earnings per share
As reported $1.10 $3.19
Pro-forma 1.07 2.95
Diluted earnings per share
As reported 1.02 2.94
Pro-forma 0.99 2.72
The Black Scholes option pricing model was used to fair value the
options using the following estimates and assumptions:
Expected life 5 years
Expected dividend yield 0.6%
Risk-free interest rate 5.0%
Stock volatility 40.0%
As at April 30, 2003 total outstanding options were 1,995,706
(2002 - 1,426,427). At April 30, 2003, 1,555,747 of the share options
were exercisable (2002 - 1,426,427). The weighted average exercise
price of the total outstanding options at April 30, 2003 was $13.86
compared to $5.86 at April 30, 2002.
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10. Guarantees The Company has given guarantees to certain lessors in respect of operating leases. If the Company fails to meet the senior credit facilities' financial ratios or breaches any of the covenants of those facilities and, as a result, the senior lenders accelerate their debt, the leases provide for a cross-acceleration that could give the lessors and financial institutions the right to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. the leases and require return of the aircraft and payment of the present value of all future lease payments and certain other amounts. If the realized value of the aircraft is insufficient in·suf·fi·cient adj. 1. Not sufficient. 2. Incapable of proper functioning. to discharge To liberate or free; to terminate or extinguish. A discharge is the act or instrument by which a contract or agreement is ended. A mortgage is discharged if it has been carried out to the full extent originally contemplated or terminated prior to total execution. the indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. due to those lessors in respect of the present value of the future lease payments, the financial institution could obtain payment of that deficiency A shortage or insufficiency. The amount by which federal Income Tax due exceeds the amount reported by the taxpayer on his or her return; also, the amount owed by a taxpayer who has not filed a return. from the Company under these guarantees. The Company has provided limited guarantees to third-parties under some of its operating leases in connection with a portion of the aircraft values at the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the leases. The leases have terms expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. between 2004 and 2010. The Company's exposure under the asset value guarantees including guarantees in the form of junior loans, deferred payments and advanced rentals is approximately $36.4 million. The resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. market for the aircraft type for which the Company has provided guarantees remains strong, and as a result, the Company does not anticipate incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. any liability or loss with respect to these residual value Residual value Usually refers to the value of a lessor's property at the time the lease expires. residual value The price at which a fixed asset is expected to be sold at the end of its useful life. guarantees. The Company has performance guarantees with two customers of a third-party lessee One who rents real property or Personal Property from another. A lessee of land is a tenant. Cross-references Landlord and Tenant. lessee n. the person renting property under a written lease from the owner (lessor). . These guarantees have been in effect since August 1995 and November 1998 and relate to the provision of helicopter transportation services involving three heavy aircraft leased to the third-party. In the event of non-performance by the third-party lessee, the guarantee may require the Company to continue the provision of services under the contract as it is the lessor One who rents real property or Personal Property to another. A lessor of land is a landlord. Cross-references Landlord and Tenant. lessor n. the owner of real property who rents it to a lessee pursuant to a written lease. to the third-party lessee of the three helicopters. The guarantees are currently being contested, however, as the Company maintains that the contract renewals with the two customers by the third-party lessee were not made in accordance with the express terms of the contracts guaranteed by the Company. As at April 30, 2003 the Company has provided limited guarantees of approximately $ 47.1 million to third-parties, principally related to the performance of the Company under long-term customer contracts. |
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